Tl & co. is following a related-linked diversification strategy, and soar inc. is following a related-constrained diversification strategy. how do the two firms differ from each other? a. soar inc. generates 70 percent of its revenues from its primary business, while tl & co. generates only 10 percent of its revenues from its primary business. b. soar inc. pursues a backward diversification strategy, while tl & co. pursues a forward diversification strategy. c. tl & co. will share fewer common competencies and resources between its various businesses when compared to soar inc. d. tl & co. pursues a differentiation strategy, and soar inc. pursues a cost-leadership strategy, to gain a competitive advantage.
Explanation: In simple words, differentiation strategy refers to the strategy in which a firm tries to develop and introduce a unique product that the customers find different from the other products offered by the competitors.
Thus, the emphasis that the company places on the differentiation works for the benefit of the company as it gives the company an easy competitive advantage.
Hence the correct option is A.
D. focus on adding unique features to her product that customers will value.
Differentiation strategy is the strategy that aims to distinguish a product or service, from other similar products, offered by the competitors in the market. It focuses on the development of a product or service, that is unique for the customers, in terms of product design, features, brand image, quality, or customer service.
The focus of competition in a differentiation strategy tends to be on unique product features, service, and new product launches, or on marketing and promotion rather than price. A differentiator would focus research and development on product features or packaging in order to add uniqueness.
Hence, Nendry should focus on adding unique features to her product that customers will value.
The Victoria's part is true she is pursuing cost leadership by keeping it's price low although the Walmart's example is not related to differentiation strategy of competitive advantage. Because keeping mix of products is not differentiation, it's not unique.Porter suggested 4 strategies and he believed that by using one of these strategies companies can gain competitive advantage.
The 4 strategies for competitive advantage:Cost Focus.Cost leadership.Differentiation Focus. Differentiation Leadership.
It is differentiation strategy A)
Differentiation strategy : this focuses on providing a product or a service with distinctive attributes, in comparison with what other competitors are offering in order gain competitive advantage. The company adopting this strategy must continuously innovate and ensure the quality features of their products and services embraced by the customers are sustained and improved upon .
Concentration strategy : here, company is using differentiation strategy but focusing on a particular niche of the market.
Lateral diversification : this is when a company decides to grow or expand by acquiring another company in the same line of business.
Vertical Integration : this is when a company decides to grow by taking over the entire value chain of operation . For instance, if we decide to acquire the business of our supplier or decide to take over distribution channels from the middle-men.
Conglomerate diversification : this is when a company decides to invest in another line of business different from our existing nature of business.
Market lead pay policy involves a company paying its employees higher wages and offer compensation that is higher than the pay rates of its competitors. This type of pay policy is normally used by organizations in highly competitive markets and helps to attract more experienced and qualified employees. This strategy leads to an increase in the overall labor cost and there is need for the organization to monitor if the benefits of the strategy is realized.
The statement is: False.
Cost leadership refers to the efforts companies make to create a comparative advantage, meaning to differentiate from competitors bu using opportunity costs that allow the production costs to be lower. Producers' discounts are not a comparative advantage unless the production of the goods offered were lower than competitors. Thus, Victoria's Secret campaign for low-priced holiday discounts is not an example of cost leadership.
The differentiation strategy is related to the differential advantage companies develop the whole offering a product that has a unique feature making it outstanding from its competitors. Most firms implementing this approach focus on the production of one product only to offer customers a specialized good. So, if Wal-Mart provides a mix of products, the store is not implementing a differentiation strategy.